2025-08-07

Precedent Transaction Method

 Precedent Transaction Method  Extracting Real World Value from Past Deals

When valuation needs to be grounded in what buyers have actually paid, not just what markets are saying, the Precedent Transaction Method (PTM) becomes your most realistic tool.

PTM is not just about numbers  it's about narratives and negotiations reflected in historical deals.

 

 What is the Precedent Transaction Method?

The Precedent Transaction Method values a business by benchmarking it against recent M&A transactions involving similar companies.

Instead of theoretical valuations, PTM uses actual deal values that capture:

  • Control premiums
  • Synergies
  • Strategic motivations
  • Competitive dynamics at the time of transaction

 

 Why PTM is Insightful:

 Reflects how much acquirers were willing to pay
 Captures intangible factors like urgency, strategic fit, and market excitement
 Offers realistic reference points, especially in strategic sales or exits

 "It’s not what it’s worth on paper — it’s what someone paid with real money."

 

 Steps to Apply PTM:

  1. Identify comparable past transactions
     Same industry, business model, geography
  2. Extract transaction multiples
     EV/EBITDA, EV/Sales, P/E, etc.
  3. Apply the multiple to subject company's metrics
     Adjust for scale, growth, risk
  4. Incorporate deal dynamics
     Timing, strategic synergies, deal structure

 

 When is PTM Most Useful?

 M&A transactions Setting or validating deal value
 Buyout offers  Determining fairness of price
 Private company exits  Especially when no public market comps exist
 Dispute resolution  When courts require real market evidence
 Family business settlements  Where cash-outs or splits are proposed

 

 Challenges to Navigate:

  •  Private transaction data may be limited or undisclosed
  •  Premiums may vary based on acquirer type (strategic vs financial)
  •  Need to normalize deal terms (earn-outs, stock vs cash, etc.)
  • Market conditions may have changed since the deal

 

 Final Insight:

 

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Frequently Asked Questions

We provide professional valuation services across the following asset classes:
  • Land & Building (Residential, Commercial, Industrial, Agricultural)
  • Plant & Machinery (Manufacturing units, industrial assets)
  • Securities or Financial Assets (Equity shares, debentures, startups, AIFs)
  • Specialized Valuations for M&A, financial reporting, IBC, income tax, and more

Yes, our reports are fully compliant with applicable laws including:
  • Companies Act, 2013
  • SEBI Regulations (SAST, ICDR, AIF)
  • IBC, 2016
  • Income Tax Act, 1961
  • Valuation Standards by ICAI, IBBI, and IVSC

Absolutely. We have IBBI-Registered Valuers under all three categories—Land & Building, Plant & Machinery, and Securities/Financial Assets. Our team also includes experienced chartered accountants and engineers.

We serve a wide range of clients including:
  • Companies & Startups
  • CA & Law Firms
  • Banks & NBFCs
  • Government Departments
  • Individuals & HUFs

Our process is simple and efficient:
  1. Initial consultation to understand the requirement
  2. Document collection and site visit (if needed)
  3. Data analysis and valuation calculation
  4. Final report delivery, certified by a Registered Valuer

Key documents generally include:
  • Ownership/title documents
  • Asset photos or plant list
  • Latest financials
  • Company PAN, GST, or registration
  • Cap tables or investment details (for startups)

Turnaround time:
  • Land/Building or Plant & Machinery: 3–7 working days
  • Financial Assets / Startups: 1–7 working days
  • Fast-track services available on request.

Valuation may be required for:
  • Startup fundraising & ESOPs
  • Business transfers or buyouts
  • Regulatory compliance (SEBI, IBC, Income Tax)
  • Bank loans or mortgages
  • Fair value financial reporting
  • Mergers & Acquisitions

Yes, we specialize in:
  • 409A compliant valuations
  • DCF, NAV, and Berkus method-based startup valuations
  • ESOP pricing & compliance support

Our fees are competitive and project-specific, based on:
  • Nature and size of asset
  • Complexity of engagement
  • Regulatory requirements
  • Contact us for a personalized quote.

Our detailed reports feature:
  • Valuation method and justification
  • Market research & data
  • Key assumptions and disclaimers
  • Final value conclusion
  • Certificate by the Registered Valuer

Yes. We offer remote/desk-based valuation for startups, financial assets, and select use-cases. For physical assets, we usually require on-site verification.

Yes. We offer:
  • Monthly/quarterly retainer packages
  • Bulk valuation pricing for CA firms, legal advisors, banks, and corporates

Yes. Client confidentiality is paramount. All data shared is stored securely and not disclosed to any third party without your consent.

You can get started by:
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